Obligatory preamble: I have been involved with Bitcoin since 2012, when a coin was worth $12. However, I’ve always been more interested in the potential of the technology rather than the price and, in any case, the majority of the recent hype and price increase is down to pure speculation rather than mass adoption. There is a very real possibility we are in a cryptocurrency bubble, and many people are set to lose a lot of money.
So why do I believe in Bitcoin?
Unlike many other Bitcoin advocates, I don’t believe that the world will soon be using Bitcoin to buy their coffee; Micropayments at scale is not something that Bitcoin can do faster, let alone cheaper, than any of the more convenient options that already exist.
Bitcoin shines in two key use cases:
- International transfers for the unbanked and financially excluded, and
- As a store of value.
Bitcoin as store of value (‘digital gold’), is already widely used as an example by the crypto community to enthusiastically extol the virtues of Bitcoin to anyone who cares to listen.
The more uncertainty there is in the markets, the more people turn to safe haven investments — typically precious metals such as gold and silver, which generally move inversely to the stock market. The value of gold, despite being tied to a physical commodity, is no less speculative than that of Bitcoin. While Bitcoin’s trading volume in comparison to gold makes it a lot more volatile, it is also much easier to obtain. People in countries with devaluing currencies or falling markets can secure their savings by investing in traditional ‘safe haven’ commodities, but are increasingly turning to Bitcoin. A google search for ‘Bitcoin Venezuela’ will provide hundreds of articles with examples of how Bitcoin mining is saving people from financial ruin — along with some more far-fetched suggestions that Bitcoin could be adopted as an official currency.
Financial Exclusion in Iran
I landed in Tehran with no money. I barely ever travel with cash — I use cards like Monzo and Revolut that allow me to make payments and cash withdrawals worldwide with negligible fees. Why then should I pay commission to an exchange office? Cash is so 2016.
Unfortunately for me, I had forgotten that the US/EU economic sanctions imposed on Iran meant that no bank in the entire country could accept my credit cards. PayPal, Western Union, bank transfers — all blocked.
If you have never experienced landing in a foreign country with no access to money before*, it can be quite an unsettling experience. Our easy and convenient 24/7 access to our money is comforting; suddenly needing to rely on the help of strangers in a country where you do not speak the language is somewhat unnerving.
I found Reza on localbitcoins. Reza is an app developer in Tehran, and uses Bitcoin as a payment method for his international clients. He agreed to meet me and give me Iranian Rials in exchange for bitcoins, which he would be able to use to pay engineers in China. For Reza, Bitcoin is one of very few options that enables him to conduct business internationally.
A week later I met Saeed, a web designer, in an internet café, to also exchange Bitcoin for cash. He has clients in the US that use Bitcoin to pay him for his services.
Of course this may not be an option forever — if sanctions are taken seriously, increased regulations might at some point exclude countries like Iran from international cryptocurrency transfers. But for now, Bitcoin is providing many people in Iran with opportunities they would not usually have access to. Not only did I get to experience a real-world use case of how Bitcoin is helping local entrepreneurs expand their businesses, but also how it can help idiotically naïve tourists like me survive in a financially excluded country.
*I’m ashamed to say that this has happened to me more than once. In 2013, I had left my credit card in a jeans pocket after a night out before flying to Russia, and had no cash on me whatsoever as I landed in a freezing cold Moscow. I hitch-hiked into the city centre, used WiFi to set up a Western Union account, and sent money to a local bank using memorised credit card details after somehow explaining the situation to them in my broken Russian. Sometimes physical fiat currency has its benefits!